Bone loss and osteoporosis are major public health problems in the elderly. Osteoblast differentiation is a crucial aspect of bone formation and remodeling, a process that is severely compromised in osteoporosis. The process of new bone formation involves the recruitment of osteoprogenitors which, with the appropriate stimulation, undergo proliferation and differentiate into preosteoblasts and then into mature osteoblasts that synthesize inorganic matrix and eventually form mineralized bone. Cyclosporin A (CsA), a widely used drug for immunosuppression and the treatment of allograft rejection. The reported effects of CsA on bone are contradictory both in human and animal studies with a common consensus that CsA causes a high turnover bone loss due to an increase in both osteoclast and osteoblast differentiation in vivo. CsA elicits its response by inhibiting the calcineurin/ NFAT (Nuclear Factor of Activated T Cells) signaling pathway. NFAT has recently been shown to play a critical role in osteoclast differentiation and bone resorption. Its role in osteoblast differentiation and bone formation is not known and is the subject of this proposal. Our preliminary, data demonstrate that CsA increases osteoblast differentiation and bone formation in vitro and in vivo by inhibiting the NFAT signaling pathway in osteoblasts. Therefore, based on our work and the work of others we hypothesize that the Cn/NFAT signaling pathway negatively regulates osteoblast differentiation. The Specific Aims are: I. Characterize the expression of Cn and NFAT in osteoblasts and determine their role in osteoblast differentiation. II. Characterize the molecular mechanisms by which NFAT regulates osteoblast differentiation. III. Characterize the role of Cn/NFAT pathway in bone formation in animal models. Despite the importance of NFAT signaling in regulating osteoclast differentiation, its role in the development of osteoblasts and bone formation remains unstudied. Findings from our studies will provide the first documentation of a novel molecular mechanism to explain the role of Cn/NFAT in regulating osteoblast differentiation. A basis will thereby be provided for the development of new targets for anabolic drugs to treat osteoporosis and bone loss.